Saturday, January 31, 2009

British Dole Queues For British Workers

This year Mrs T and I decided to shun the superficial glitz of Davos, and instead we've spent a few days meeting some real opinion formers up in the Midlands.

Opinions there are being formed around two key questions. First, WTF has happened to all those promised British jobs for British workers? And second, how much longer do we have to tolerate that appalling Brown bloke pushing his ugly duplicitous mug into our living rooms every night?

On the jobs question, the Polish receptionist who checked us into our Oxfordshire hotel explained things had gone "a bit quiet". Not that we were the only guests - oh, no, by no means - there was a Dutch couple, and some other people might come in for dinner. Later, as we smiled supportively at our most attentive Indian waiter and Czech waitress, we wondered how they and the kitchen staff were going to fill the rest of the evening once we'd finished.

Then, on the way home yesterday, we dropped into Bicester Village, seduced by the allure of "Chic Outlet Shopping" (Paris, Rome, and Junction 9 of the M40). There, unlike our hotel and our own local high street, the staff all seemed to be Brits. No obvious Poles, Czechs, or Indians - all apparently local Oxfordshire types. How odd.

And especially odd given that most of the punters seemed to be Chinese. Not your British Chinese, but real Chinese, as in can't speak English Chinese. And according to one of the shop assistants, that's not unusual: the Village gets coachloads of shopping tourists, many of them from overseas.

So we have Chinese shoppers jetting to J9 of the M40 and loading up on discounted Ralph Lauren, Burberry etc, much of which - according to the small print on the labels - was manufactured in... er... China.

A quick check on the Yuan/Sterling exchange rate explains all: with sterling's collapse, the Yuan in those Chinese designer pockets at J9 is now worth a staggering 50% more than it was last year.

Hmm. Maybe. But not unless British workers are prepared to accept Chinese wage levels and working conditions.

As we all understand by now, Britain's jobs outlook is dire.

Let's remind ourselves how the overall jobs structure has changed under Labour. Brown has constantly boasted of the 3 million jobs "he created", but he's always been much less forthcoming on the mix of those jobs.

The truth is that under him, although the total number of jobs increased by 2.8 million (1997 Q2 to 2008 Q3), more than all of them came in just two areas:

Public sector - jobs in education, health, and public administration increased by 1.4 million

Finance and business services - up by 1.6m

In sharp contrast, manufacturing jobs, like those at Burberry, were whacked. Overall, despite Brown's much vaunted boom, they declined - yes, declined - by 1.4 million to a mere 3.1 million. Labour's debt-fuelled boom sucked in such huge amounts of foreign capital, it ramped our exchange rate way above the level that could sustain much of British manufacturing.

So now, with finance and business services in freefall, and the public finances unable to support more public sector jobs, we're kind of stuck. Manufacturing might well rebuild itself and its jobs in the long-term, but as we see from our mothballing car industry, we shouldn't hold our breath.

Which brings us back to the question of who should get the jobs that do exist?

As we've blogged many times, Labour's mass immigration policies brought no net economic benefit to Britain in terms of GDP per head (eg see here). But they clearly put downward pressure on wages at the low end. In broad terms, the rich and the employers really did get the benefits, and the poor really did get the costs.

And in terms of those 2.8 million new British jobs, most studies have concluded that at least two-thirds of them went to migrant workers (eg see this blog).

Now boom has turned to bust, that process looks set to intensify. We don't have all the facts about those Italian and Portuguese contractors, but you'd have to guess they're cheaper than the locals. And it also seems that many of the supposed temporary migrants from Eastern Europe have no intention of leaving again anytime soon. Times are going to get even tougher for indigenous workers outskilled and/or underpriced by migrant labour.

So what's going to happen?

It goes without saying that there will be some very long dole queues. But it's starting to look a lot uglier than that.

Labour's open-door immigration policies have left us with a serious problem. And that's on top of the desperate debt hangover they're leaving us.

True, Labour will be destroyed in next year's election. But that hardly seems enough somehow.

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